The Road Warrior Of Agriculture

With rising interest rates on long-term money, many producers are looking for an opportunity to lock in interest rates. I had the pleasure of moderating a panel of agricultural bankers and Farmer Mac staff at the North American Ag Lending Conference recently. Farmer Mac is the secondary finance market for agricultural mortgage loans.

The American Bankers Association and Farmer Mac unveiled a new product at the conference. It is available to all ABA members and Farmer Mac participants. The bottom line is that the difference between short term money, i.e. one-month adjustable rate mortgages, and fixed 15-year terms is between one and two percent. Historically, you would see a two to four percent difference.

With operating expenses increasing it might be prudent to at least check out all options with any choice to lock in interest rates. If interest cost is one of your top three ranking expenses and you are tight on cash flow margin, conditions may be favorable to check out these options.

The following website, www.farmermac.com, will have further details on product descriptions.

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.